Economic Situation
Exporting Gulf oil is picking up again, but it is steering clear of Europe. The Middle East shipped 12.8 million barrels per day in September, hailed as a record since February, but this is mistaken: there is still a shortfall of six million barrels compared to that month, and transit through Hormuz has fallen to 7.4 million barrels per day, versus roughly a dozen to fifteen a year ago.
Yet Saudi Arabia has more than doubled its September loadings to 5.4 million barrels per day after 2.4 in August. However, they exit via Ras Tanura and head for Asia.
The pipeline linking the kingdom to the Red Sea was damaged on September 10 and 11. It has only been back in operation since the 23rd, at a reduced throughput. Aramco has even informed at least two European refiners that no cargo would reach them in October.
These missing barrels are being replaced at a high price. Norwegian crude Johan Sverdrup fetched as much as $35 more per barrel than the Brent benchmark, a gap that had stood at just 60 cents on September 8. The disruption mainly affects refined fuel: the Gulf is shipping only a quarter of the diesel sold before the war, and every barrel converted into Europe yields more than $85 for refiners, like never before.
At the pump, the diesel price stood at €2.399 per liter on September 25, a level that the March 2022 peak of €2.1407 had not reached. In one out of ten stations, at least one type of fuel was out of stock.
The €450 million in targeted subsidies announced by the state will not lead to lower displayed prices. In our view, this European disadvantage will persist as long as Gulf barrels head toward Asia: transfers, coaches, and winter travel are therefore budgeted on fuel that remains durably expensive.
Yet Saudi Arabia has more than doubled its September loadings to 5.4 million barrels per day after 2.4 in August. However, they exit via Ras Tanura and head for Asia.
The pipeline linking the kingdom to the Red Sea was damaged on September 10 and 11. It has only been back in operation since the 23rd, at a reduced throughput. Aramco has even informed at least two European refiners that no cargo would reach them in October.
These missing barrels are being replaced at a high price. Norwegian crude Johan Sverdrup fetched as much as $35 more per barrel than the Brent benchmark, a gap that had stood at just 60 cents on September 8. The disruption mainly affects refined fuel: the Gulf is shipping only a quarter of the diesel sold before the war, and every barrel converted into Europe yields more than $85 for refiners, like never before.
At the pump, the diesel price stood at €2.399 per liter on September 25, a level that the March 2022 peak of €2.1407 had not reached. In one out of ten stations, at least one type of fuel was out of stock.
The €450 million in targeted subsidies announced by the state will not lead to lower displayed prices. In our view, this European disadvantage will persist as long as Gulf barrels head toward Asia: transfers, coaches, and winter travel are therefore budgeted on fuel that remains durably expensive.
Exchange Rates: The Technical Update
The euro closed Friday at 1.1391 dollars, down 0.81% on the week, marking its third consecutive decline. A floor is emerging between 1.1323 and 1.1353; if it yields, the path could open toward 1.09, which we do not expect. Our short-term range stands from 1.13 to 1.15.Services priced in dollars, including North American hotel stays and cruises, are therefore a bit more expensive than in August, with no break in sight.
The Canadian dollar had everything going for it to benefit from the crisis, since Canada sells oil. It did not benefit: one euro was still worth 1.6111 Canadian dollars on Friday. Its central bank did not tweak its rate, kept at 2.25%, and Alberta ships its crude by pipeline to its American neighbor at a discounted price.
The yen, however, deserves attention.
Japan and the United States had jointly bought yen in August to support the Japanese currency, and Tokyo reminded on September 24 that this arrangement remains in force. A yen buyer thus faces two risks: the market, and a political decision capable of sending the currency surging. It took 179.17 yen to buy one euro on Friday evening.
Morocco, for its part, offers unusual visibility. The dirham’s value is pegged to a basket consisting of 60% euros and 40% dollars, within a fluctuation margin of 5%, so it never strays far from the euro.
The dirham is slowly retreating for four weeks, down 0.3% between September 17 and 23, to around 10.945 dirhams per euro. A Marrakech-traded circuit therefore settles at the same price as in August on the exchange, when fuel nonetheless weighs on it.
| WEEKLY SUPPORTS | WEEKLY RESISTANCES | |||
| S2 | S1 | R1 | R2 | |
| EUR/USD | 1.1323 | 1.1359 | 1.1450 | 1.1495 |
| EUR/GBP | 0.8520 | 0.8560 | 0.8635 | 0.8680 |
| EUR/CHF | 0.9355 | 0.9400 | 0.9475 | 0.9520 |
| EUR/CAD | 1.5960 | 1.6040 | 1.6190 | 1.6270 |
| EUR/JPY | 176.60 | 178.00 | 180.50 | 181.90 |
The supports and resistances shown below indicate, respectively, the lower and upper bounds within which prices are expected to move during the course of the week.
The information presented in this publication is provided for purely informational purposes and does not constitute investment advice, nor an offer to sell, nor a solicitation to buy, and should in no way be used as a basis or be taken into account as an incentive to engage in any investment.
Mondial Change is a French financial institution, founded in 2015, specializing in international payments management and foreign exchange risk.
Mondial Change also supports numerous players in tourism, travel agencies, group organizers, tour operators, and incoming operators…
www.mondialchange.com
Contact : [email protected]
Mondial Change also supports numerous players in tourism, travel agencies, group organizers, tour operators, and incoming operators…
www.mondialchange.com
Contact : [email protected]
